Regulations create monopolies. Even when regulations are aimed at curbing the control of giants, smaller players usually can't afford them and lose market share. This is actually taught as a competitive advantage strategy in business school. Corporations lobby the government to implement laws that seem to hurt them but in actuality create an uneven playing field where marketshare becomes available due to the higher implementation cost.
Aren't monopolies is what we end up by default if have no regulation at all?
And yes, not every regulation destroys monopoly, but regulation is the only thing that could break one.
> Aren't monopolies is what we end up by default if have no regulation at all?
No. Monopolies are only inevitable if the goods aren't elastic, if there is a large cost of entry into the market, or if its a market you can create a moat that is unsurmountable.
Many markets don't have that even with 0 regulation, but might have second order problems like firms creating unsafe products for example.
But in general regulations almost always even unindentedly raise the cost to enter the market. If you make a new regulation that food needs to be safe, then the company needs to pay a safety inspection that a small home-made recipe might not be able to afford (to give a simple example).
At the same time, we now have uber large corporations due to non elastic parts of supply chain (like land) or moats that are insurmountable (like access to US capital). In which case, the FCC should break up monopolies as the current market is not catering to end users and consumers but to owners, which is why the Stock market has been in a never ending bull run.
Don't bigger companies also often benefit from scale in multiple ways so it gets harder and harder for newcomers to compete? And if a newcomer does manage to get a foothold, it might get bought.
> Don't bigger companies also often benefit from scale in multiple ways so it gets harder and harder for newcomers to compete?
That is one of the ways a Moat can happen and a monopoly can occur. For example if you were the only person with a loom and everyone else had to make jumpers by hand, you could make them so cheap they would have to close down.
In some markets those ways you can benefit from scale exist, in others there are drawbacks. In many cases those advantages only exist due to either regulation or lac thereof.
For example ways companies might have an advantage is by manufacturing in cheaper countries, but that only works because those workers have less rights and the cost of transporting is not properly taxed. Carbon taxes on shipping would make manufacturing in China pretty comparatively priced to many european countries. But if you let them contaminate the ocean with crude oil boats, then their manufacturing prowess and cheaper labour cost will offset the shipping cost and destroy a newcomer.
These are very basic examples and they all require nuance but hope it helps to explain it a bit more.
Another example is restaurants, you used to have some advantages from being a chain, but you would still constantly see mom and pop joints compete and even win. But as rent prices keep increasing (the non elastic market of the ground under the lease), suddenly the advantages of scale start beating the disadvantages of worse food and service.
MS did a lot of lobbying to prevent European governments from trying to migrate to Linux and/or OpenDocument.
Groklaw was a website that was started by a paralegal to try to understand, explain and report on the SCO lawsuit - who benefited and how they benefited. It ended up expanding into the EU anti-trust action against Microsoft and OpenDocument (and how OpenOffice was created as a trojan horse to defang OpenDocument).
https://en.wikipedia.org/wiki/Groklaw
There is always imperfect information, there is no such thing as a perfect market and as a result regulation will always be needed to curb the excesses such as monopoly. Even if we had perfect information, humans remain irrational. This is a simple fact of life and the universe.
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> Spoken like a true 120-year who trusts blindly everything he hears online from Rothbard
This ad hominem stuff is genuinely worthless.
I don't think so. Because the theories about elastic markets and monopolies do have a high 'spherical frictionless cow` smell. And they are posed here as gospel. So while it might be a bit of an ad hominem to frame someone as a 120 year old it does succinctly point out a problem and hence adds information.
Things "having a smell" is not an argument, and they weren't posed as gospel.
I've yet to see anyone counter the basic points of that post, because they look pretty solid. Happy if you have a non-vibes based rebuttal.
> And they are posed here as gospel
The same could be said for people who suggest regulation for every problem that comes up, even for problems that were caused by regulation. Maybe we have our blindspots, but the "regulate everything" crowd is much louder and more prevalent on HN than the free market absolutists.
Here's another ad-hominem (to another poster), cause you guys just cannot argue in good faith: Spoken like a true American who had long-forgotten nuance exists.
I mean, has there any empirical evidence disproven any of those base assumptions?
In econ the easiest part is to create a model, the hardest part is seeing it crash against reality. But the basis of monopolies seems to be pretty thoroughly tested. The biggest issues you have now are Chesterton Fence's. Were its hard to know what laws and regulations are therefore safety, parity and economic performance and ones are only creating friction with no benefit due to years of laws being put on top of other laws
> where are the proofs
> I know "chesterton fence", I smart
Went from nice to rude in no time.
4chan greentext style over substance is cute, but its outdated and wasnt that funny a decade ago
if you have nothing to add, then why reply?
I have never been nice, but I admit I have no better literary device to concisely express my sentiment towards your flawed position, to put it nicely.
I am pro-regulation, where regulation for me is busting monopolies, preventing tragedy of commons, setting necessary quality checks, forbidding forced labor. I am against regulation, when it's chat control, 100% tarrifs on whatever, forbidding working on Friday past 17:00 and completely on Weekends. < Why do I even have to point this out?
There's no nuance remaining in this world, people (the proselytizing nerd types) emotionally attach themselves to sophistry that is the spelled-out economic theories, while completely disregarding common sense. Missing forest for trees.
In short - fuck America.
> I have never been nice,
first comment was both cheeky and had a "i agree" at the end. Those are both niceties. Not sure why I would have to explain tone from mild critique to being a wee cu nt in back to back messages
> I am pro-regulation, where regulation for me is busting monopolies, preventing tragedy of commons, setting necessary quality checks, forbidding forced labor. I am against regulation
What does any of this nonsense have anything to do with me replying to someone who had a basic question about the non existance of monopolies in unregulated markets?
I explained the basic mechanisms for monopoly creation which are all easy math formulas that happen in bacteria growth too because "if nothing stops me I eat everything" is equally valid in any env where there is growth
> There's no nuance remaining in this world
coming from anti-intellectual "oh you know chesterton fence" responses is pretty ironic.
Btw if you are going to call people out for using big words maybe dont come out with the most 17 year old "people arent as smart as me as they emotionally attach themselves to sophistry while I am a nuanced rational ubermench". It reeks of intellectual insecurity.
i asked for empirical evidence against the mechanisms of monopoly creation because moats, regulation and inelastic markets are the most studied and reproducible mechanisms in anture, economics and any growth env. The formula just converges to infinity
> In short - fuck America.
its like 3am there, everyone here is asian and european rn... you are fighting windmills
Are there any examples of monopolies being (successfully) broken up in Europe? Or do you posit that regulation stop them from forming?
Pre WW2 Europe was full of (state backed) cartels and monopolies. These were dismantled for the most part.
A lot of these were international. Just read up on "Cartel capitalism".
https://www.cambridge.org/core/journals/enterprise-and-socie...
The European Steel and Coal Community (precursor of the EU) was also involved in the effort to stop these. In general this has been something the EU has been involved in since its inception and the best action against monopolies is to not let them form in the first place (why there is so few of them in general in most developed countries. Though that is now slowly changing it seems)
Look into the mechanisms being worked on to create competition in rail operators (which has been opening the markets to competitor rail operators)
No, in fact most monopolies occur in heavily regulated markets, where unregulated markets are virtually always free.
Keep in mind that just having a big market share isn’t a monopoly, being able to charge monopoly prices is.
> Aren't monopolies is what we end up by default if have no regulation at all?
No.
19th century begs to differ.
A better answer would be 'not always'.
The proposed regulations forcing everybody to use google or apple are ridiculous and very much the opposite of the kind of regulations we need though...
or “sometimes not, until more data arrives”.
Unless regulations explicitely incorporate how to handle incumbents & newcomers. One instance of that is MMTIS (multi modal passenger information), which explicitly states innovation and new players as a goal. There are other similar examples.
My intuition is that this is not necessarily true, but probably often true in practice but perhaps someone more educated on the matter can speak on that. It must also depend on the expensiveness of the regulation in question. Since in tons of areas regulations are absolutely vital so that for example our buildings don’t collapse, our food remains non-toxic and the medicine we buy is not the pharmacological equivalent to russian roulette the goal should then be to optimise the cost performance of regulations.
> Corporations lobby the government to implement laws that seem to hurt them but in actuality create an uneven playing field where marketshare becomes available due to the higher implementation cost
(nit: I assume you meant "marketshare becomes unavailable")
So you mean that regulations that are created based on lobbying by corporations help them become monopolies? Sure, that makes sense. But thats different from a blanket "Regulations create monopolies".
Because the smaller players can't afford to implement the new regulations they lose their marketshare and it now becomes available for the bigger competitors to absorb.
> Regulations create monopolies. Even when regulations are aimed at curbing the control of giants, smaller players usually can't afford them and lose market share. This is actually taught as a competitive advantage strategy in business school. Corporations lobby the government to implement laws that seem to hurt them but in actuality create an uneven playing field where marketshare becomes available due to the higher implementation cost.
The only way to guarantee a monopoly is to have a total lack of regulation. It's known that every "free" market will tend towards monopoly due the 1% law. Regulations are the only way to actually guarantee free markets because perfect free markets only exists in abstract, not in reality. Sometimes, a free market is the wrong solution and you need a regulated monopoly instead and with identity that's the best solution. Why? Because identity is unique to the individual. A individual must (in theory) only have one identity and with very extreme and usually well documented exceptions, such identity doesn't change. The state is the one that must provide a good way for identity and if smaller countries doesn't have the resources, then big countries should provide for all. Also, it removes incompatibility inter-countries while keeping private interests out.
The state should have the sole monopoly on attesting to anyone identity. Because they are the only ones that are not affected by market conditions. This is how countries that have advanced in this topic actually work. If individual states can't reach a common solution, then the collective must do so. The collective failed here because it recommended a private solution rather than mandated a european one. Private sector must not dictate what or how identity is attested, because the private sector has it's profit pursuing agenda, state must evaluate solutions but it's up to the states to run them and implement them.
Market solutions are good for several things, this isn't one of them.
Regulations __can__ create monopolies. DMA is a regulation, but it does not have the shortcomings you mentioned.
DMA seems explicitly written to only target monopolies, though (and seems like a surrender from the EU, since monopolies should be broken up and not get laws codifying their business models IMHO).
Can you imagine the collective screeching, across the White house, HN and Apple reality distortion field, that'd happen if EU attempted to breakup the American monopolies?
Electing to not do something impossible and framing it as a surrender is strange to me.
The countries that let Donald Trump's screeching dictate their policies don't fare any better than those who ignore it.